Central Bank: A Central Bank or reserve bank, by definition, is the organization within a specific country or coalition of countries that regulates all of the currency supplies and related policies for that particular area. A Central Bank will perform various actions, but its most important job is to make certain that the national currency and money supply remain stable. Depending on the country, Central Banks may be government owned and controlled or may be run under regulations that are specifically created to prevent extensive government interference.
Functions of Central Bank:
The important functions of Central Banks are as follows:-
1-Sole right of note issue
The Central Bank in every country, now, has the monopoly note issue. The issue of notes is governed by certain regulation which is enforced by the state.
2-Banker to the state
A Central Bank acts as a banker to the government. It holds cash balances of the government free of interest.
3-Banker's bank.
The central bank acts as a banker to the commercial banks.
4-Banker's clearing house
The Central Bank acts as a clearing house for the settlement of mutual obligations of different commercial banks. If a difference exists, it is paid by a cheque drawn on the banks accounts carried at the Central Bank.
5-Lendor to the last resort
The Central Bank helps the member banks in times of crisis.
6-Financial agent
The Central Banks act as financial agents for the government. It is an agent for the government in purchasing and selling of gold and foreign exchange.
7-Effective monetary policy
The aim of the government is to create employment in the country, resist undue inflation and achieve a favorable balance of payment.
8-External functions
The Central Bank also performs a number of external functions
The important functions of Central Banks are as follows:-
1-Sole right of note issue
The Central Bank in every country, now, has the monopoly note issue. The issue of notes is governed by certain regulation which is enforced by the state.
2-Banker to the state
A Central Bank acts as a banker to the government. It holds cash balances of the government free of interest.
3-Banker's bank.
The central bank acts as a banker to the commercial banks.
4-Banker's clearing house
The Central Bank acts as a clearing house for the settlement of mutual obligations of different commercial banks. If a difference exists, it is paid by a cheque drawn on the banks accounts carried at the Central Bank.
5-Lendor to the last resort
The Central Bank helps the member banks in times of crisis.
6-Financial agent
The Central Banks act as financial agents for the government. It is an agent for the government in purchasing and selling of gold and foreign exchange.
7-Effective monetary policy
The aim of the government is to create employment in the country, resist undue inflation and achieve a favorable balance of payment.
8-External functions
The Central Bank also performs a number of external functions
0 comments:
Post a Comment